HE CALLS it Garbagegate because he thinks it's a load of rubbish. The papers call it Mittalgate after the mysterious Indian billionaire at the heart of the story.

I call it Blairgate, because that's what it really is - a scandal that goes right to the heart of Tony Blair's premiership.

The Prime Minister sent a letter to the Romanian government supporting a bid by Lakshmi Mittal to buy that country's steel industry. The £300million deal was sealed the day after Tony Blair's letter arrived.

It now turns out that Mr Mittal had earlier given the Labour Party £125,000. He also made a payment of £16,000 in 1997.

We have been here before. New Labour first denied that Formula One racing boss Bernie Ecclestone had made a donation to the party. Then it was admitted he gave a million smackers. And motor racing was excluded from the ban on tobacco advertising.

Blair was compelled to apologise and the party returned the money. Ecclestone still got his exemption from the law.

This scandal is following a familiar New Labour pattern: First, outright denial. Then, rubbishing the story. We are in rubbish phase right now.

But I shall be surprised if there are not further damaging disclosures and we will then move on to the final phase: A stage-managed version of the truth with someone - anyone but Blair himself - cast as the fall guy.

Blustering Tony worked himself up into a lather of indignation at Prime Minister's Questions. He was furious, or he pretended to be furious, that anyone could doubt his word. Assuming, as I do, that all politicians are congenital liars, I am not obliged to take him on trust. So I do not believe that the Prime Minister did not know that his "friend" the Indian billionaire was a major donor to party funds.

As for his oft-repeated claim that Mr Mittal's company LNM is a British firm, that is a sick lie. The company, which employs 125,000 people worldwide, is registered in the Dutch Antilles. Like many other multinationals, it has an office in London, in this case employing fewer than 100 people. LNM is as British as the Taj Mahal.

The Tories are seeking to make political capital out of Blairgate. Iain Duncan Smith had demanded a public inquiry. He might as well ask for a gift-wrapped parliamentary majority.

But the Tories could land a few blows with this scandal. Coming on top of the second disgrace for spin doctor Jo Moore, it lends substance to the charge of New Labour sleaze.

Particularly in the light of Blair's insistence that he would have signed the letter even if he DID know about Mr Mittal's financial relationship with the Labour Party.

You could call that chutzpah. I prefer to see his attitude in a colder light. The Prime Minister is perfectly happy to give a business advantage to firms that bankroll his party. I call that corruption.